U.K. balance of payments deteriorates sharply

JasonDouglas

LONDON--The U.K. economy grew strongly in the third quarter but its balance of payments with the rest of the world deteriorated sharply, data showed Friday, raising fresh questions about the durability of Britain's economic recovery.

The Office for National Statistics on Friday confirmed the U.K. economy expanded 0.8% between the second and third quarters, an annualized rate of 3.2%. The expansion was driven by higher output across the manufacturing, services and construction industries, and the eighth quarter in a row of rising household consumption, financed by a small rise in incomes and lower saving.

But data showed Britain's balance of payments with the rest of the world deteriorated sharply following a slump in exports and a fall in British firms' earnings overseas, a reflection of a sluggish global economy. The nation's current account deficit widened to 20.7 billion pounds ($33.89 billion), a shortfall equivalent to 5.1% of overall gross domestic product. That's the widest deficit since 1989, the ONS said.

The data underscore how a hoped-for rebalancing of the U.K. economy towards trade and investment and away from debt-fueled consumption remains a distant prospect. Public finances data Friday showed the U.K.'s budget deficit was wider in November than a year earlier. The Bank of England has warned rebalancing will be required if Britain's economic recovery is to prove sustainable.

Ratings agency Standard and Poor's on Friday affirmed its AAA rating for the U.K. but retained a negative outlook, citing "risks to the sustainability of growth."

Write to Jason Douglas at jason.douglas@wsj.com and Ilona Billington at ilona.billington@wsj.com

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.